JUDGMENT OF THE COURT (First Chamber)
12 October 2023 (*)
(Reference for a preliminary ruling – Aid granted by Member States – Renewable energy subsidy – Construction of a wind farm – Communication from the Commission entitled ‘Guidelines on State aid for environmental protection and energy 2014-2020’ – Paragraph 19(44) and footnote 66 – Concepts of ‘start of works’, ‘construction works on the investment’, ‘other commitment that makes the investment irreversible’ and ‘necessary state authorisation for constructing the project’ – Type and intensity of the scrutiny that must be conducted by the competent national authority)
In Case C‑11/22,
REQUEST for a preliminary ruling under Article 267 TFEU from the Tallinna Halduskohus (Administrative Court, Tallinn, Estonia), made by decision of 5 January 2022, received at the Court on the same day, in the proceedings
Est Wind Power OÜ
v
Elering AS,
THE COURT (First Chamber),
composed of A. Arabadjiev (Rapporteur), President of the Chamber, T. von Danwitz, P.G. Xuereb, A. Kumin and I. Ziemele, Judges,
Advocate General: A. Rantos,
Registrar: C. Strömholm, Administrator,
having regard to the written procedure and further to the hearing on 12 January 2023,
after considering the observations submitted on behalf of:
– Est Wind Power OÜ, by P. Kergandberg and E.‑K. Velbri, vandeadvokaadid,
– Elering AS, by T. Järviste and V. Šipilov, vandeadvokaadid,
– the Estonian Government, by M. Kriisa, acting as Agent,
– the European Commission, by G. Braga da Cruz, I. Georgiopoulos and E. Randvere, acting as Agents,
after hearing the Opinion of the Advocate General at the sitting on 23 March 2023,
gives the following
Judgment
1 This request for a preliminary ruling concerns the interpretation of paragraph 19(44) of, and footnote 66 to, the Communication from the Commission entitled ‘Guidelines on State aid for environmental protection and energy 2014-2020’ (OJ 2014 C 200, p. 1; ‘the 2014 Guidelines’).
2 The request has been made in proceedings between Est Wind Power OÜ (‘EWP’) and Elering AS, a transmission system operator, concerning the lawfulness of an assessment, issued by Elering at EWP’s request, finding that the state of progress of an investment project for the construction of a wind farm does not meet the requirements under national law allowing EWP to qualify as an ‘existing producer’ of energy and therefore to enable the latter to benefit from grants for the construction of that wind farm.
Legal context
European Union law
Regulation (EU) 2015/1589
3 Article 29(1) of Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 [TFEU] (OJ 2015 L 248, p. 9) provides:
‘For the application of Article 107(1) and Article 108 TFEU, the courts of the Member States may ask the [European] Commission to transmit to them information in its possession or its opinion on questions concerning the application of State aid rules.’
The 2014 Guidelines
4 Paragraph 19(44) of the 2014 Guidelines contains the following definition:
‘“start of works” means either the start of construction works on the investment or the first firm commitment to order equipment or other commitment that makes the investment irreversible, whichever is the first in time. Buying of land and preparatory works such as obtaining permits and conducting preliminary feasibility studies are not considered as start of works. For take-overs, “start of works” means the moment of acquiring the assets directly linked to the acquired establishment.’
5 Paragraph 50 of those guidelines states:
‘The Commission considers that aid does not present an incentive effect for the beneficiary in all cases where work on the project had already started prior to the aid application by the beneficiary to the national authorities. In such cases, where the beneficiary starts implementing a project before applying for aid, any aid granted in respect of that project will not be considered compatible with the internal market.’
6 Paragraph 126 of those guidelines provides:
‘In a transitional phase covering the years 2015 and 2016, aid for at least 5% of the planned new electricity capacity from renewable energy sources should be granted in a competitive bidding process on the basis of clear, transparent and non-discriminatory criteria.
From 1 January 2017, the following requirements apply:
Aid is granted in a competitive bidding process on the basis of clear, transparent and non-discriminatory criteria (66) …
…’
7 According to footnote 66 to those guidelines:
‘Installations that started works before 1 January 2017 and had received a confirmation of the aid by the Member State before such date can be granted aid on the basis of the scheme in force at the time of confirmation.’
The 2017 Decision
8 Recitals 42 to 44 of Commission Decision C(2017) 8456 final of 6 December 2017 concerning amendments to the Estonian support scheme for electricity produced from renewable sources and efficient cogeneration (State aid SA.47354 (2017/ NN)) (OJ 2018 C 121, p. 7; ‘the 2017 Decision), are worded as follows:
‘(42) Footnote 66 [to the 2014 Guidelines] might be read as a transposition of the legal principle of “legitimate expectations” and is closely linked to the State aid requirement of “incentive effect”. In practice, this means that the granting authorities should consider as “existing producer” those producers whose project on 1 January 2017 was in such state of development that it would very likely be completed so that they should receive support under the existing support scheme (legitimate expectations). This requires as a minimum that the project developers had obtained the necessary state authorisation for constructing the project, and that they had the legal title to the land on which the project would be developed.
(43) The “start of works” definition in paragraph 19(44) [of the 2014 Guidelines] provides more details in this respect. Footnote (66) [to the 2014 Guidelines] should thus be read and interpreted by the granting authorities against this background. The Commission notes in this respect that the responsibility for the correct implementation of aid measures remains with the Member States via its relevant authorities.
(44) In the event that the granting authority would consider that works on a certain project have been started, within the meaning of paragraph 19(44) [of the 2014 Guidelines], prior to 1 January 2017, the Commission is of the opinion that such consideration relates to the project as such.’
Estonian law
9 Paragraph 59 of the elektrituruseadus (Law on the electricity market) of 11 February 2003 (RT I 2003, 25, 153), in the version applicable to the dispute in the main proceedings (‘the ELTS’), entitled ‘Aid’, provided as follows:
‘(1) A producer is entitled to claim from the transmission system operator the aid referred to in this paragraph:
(1) for the production of electricity from a renewable energy source, using a generating unit with net output of no more than 125 [megawatts (MW)];
…
(2) The transmission system operator shall pay aid to the producer at the latter’s request:
(1) at the rate of EUR 0.0537 per kilowatt-hour of electricity if that electricity is produced in accordance with subparagraph 1(1) … above;
…
(21) The aid referred to in [Paragraph 59(2)] constitutes State aid within the meaning of Article 107(1) [TFEU], granted in line with the [2014 Guidelines] and in accordance with the [2017 Decision].
(22) The aid referred to in [Paragraph 59(2)] for energy produced using a generating unit with net output of at least 1 MW may be requested by a producer which, by 31 December 2016 at the latest, has commenced the construction works on the generating installations to which the investment project relates, and:
(1) has started producing electricity;
(2) has started construction works related to that investment project;
(3) has entered into a firm commitment to order equipment for the construction of a generating installation;
(4) has entered into any other commitment that makes the investment project irreversible; the buying of the land on which the generating installation will be located, the obtaining of permits and preparatory works are not regarded as commitments that render the investment project irreversible.
(23) Where the producer applies to the transmission system operator for an assessment of the compliance of the investment project with the conditions set out in [Paragraph 59(22)], it must be made within 90 days of receipt of the application.
…’
The dispute in the main proceedings and the questions referred for a preliminary ruling
10 For the purpose of installing a wind farm comprising 28 wind turbines with a total capacity of 64.4 MW in Päite-Vaivina, in the municipality of Toila (Estonia) (‘the proposed wind farm’), EWP, on 27 April 2004, entered into a connection contract with Elering under which it paid connection fees of EUR 522 813.93 to the transmission system concerned.
11 In the course of 2008, EWP erected wind measurement masts on that wind farm, incurring costs of EUR 212 002.15. By an agreement of 11 May 2010, EWP acquired development rights for the 28 plots of land proposed for the installation of those wind turbines.
12 On 19 January 2016, the Toila Municipal Council established the planning conditions for the proposed wind farm and, on 4 February 2016, EWP applied for a construction permit for the wind farm. On 20 April 2016, the Ministry of Defence refused to approve the construction plans for that wind farm and, by order of 26 April 2016, the Toila Municipal Council refused to grant the construction permits sought by EWP. The latter brought an action against those refusal decisions.
13 On 29 September 2020, in accordance with Paragraph 59(23) of the ELTS, EWP applied to Elering for an assessment of the compliance of the investment project relating to the construction of that wind farm with the conditions set out in Paragraph 59(22) of that law.
14 In its assessment No 22-7/2020/29-5 of 13 April 2021, Elering found that that project did not meet those requirements on the ground, inter alia, that EWP could not be considered to be an ‘existing producer’ on 31 December 2016. If that had been the case, EWP would have been entitled to obtain aid for the construction of the proposed wind farm on the basis of an existing aid scheme.
15 On 13 May 2021, EWP brought an action before the Tallinna Halduskohus (Administrative Court, Tallinn, Estonia), the referring court, seeking the annulment of that assessment and an order requiring Elering to reconsider the application referred to in paragraph 13 above. The dispute in the main proceedings thus concerns the legality of that assessment.
16 The referring court states that, in accordance with Paragraph 59(22) of the ELTS, the concept of ‘existing producer’ includes a producer who started work on an investment project pertaining to a generating unit by 31 December 2016 at the latest, in so far as it has ‘started construction works’ relating to that investment project or has ‘entered into any other commitment that makes the investment project irreversible’, it being understood that neither the acquisition of the land on which the generating installation is located, nor the obtaining of the permits, nor the preparatory works are considered to be commitments that make the investment project irreversible.
17 EWP and Elering disagree as to whether, on 31 December 2016, EWP had ‘started construction works’ relating to the proposed wind farm or had ‘entered into any other commitment that makes [such an] investment project irreversible’.
18 As regards the latter condition, the parties are in disagreement, in particular, over the definition of the concept of an ‘irreversible’ ‘investment project’, that is to say, whether that concept includes carrying out an economic analysis relating to the proportion of the costs incurred in the investment project concerned compared with the total cost of that project and whether, in the event that Elering regards part of the expenditure incurred as preparatory works or costs which are not part of the irreversible expenditure, such as those connected with the purchase of land or the acquisition of a development right, they should also be excluded from the total cost of that project in such an economic analysis, since it includes a comparison of the percentage share represented by the expenditure incurred in the total cost of that project.
19 Similarly, the parties disagree, first, as to whether, on 31 December 2016, the applicant had the necessary state authorisation for constructing that project and, second, whether that state authorisation must necessarily be a construction permit or whether it may also be an urban planning document, such as a general urban development plan or a detailed urban development plan, or a list of the planning conditions, which document and list are issued prior to the construction permit under national law.
20 EWP considers that it has ‘started construction works’ relating to the proposed wind farm, since it built wind measurement masts and a connection station for that wind farm to the substation in Allika (Estonia) before 31 December 2016.
21 Elering describes as ‘irreversible expenditure’ the expenditure incurred for the construction of wind measurement masts, in the sum of EUR 212 002.15, and the connection fees, in the sum of EUR 522 813.93, but considers that such investments are not sufficient to establish that the investment project concerned would very likely be completed, since those commitments do not represent a significant part of the total cost of that project, estimated at EUR 67 224 000, or barely 1.09% of the total cost.
22 Furthermore, Elering submits that, in those circumstances and so as not to negate the scheme of Paragraph 59(22) of the ELTS, the condition relating to the start of works, laid down in that provision, cannot be satisfied either, since the irreversible nature of the investment project concerned constitutes a relevant factor in all the situations referred to in that provision, including as regards that condition, which EWP disputes.
23 The Tallinna Halduskohus (Administrative Court, Tallinn) notes that, in the main proceedings, it requested, pursuant to Article 29(1) of Regulation 2015/1589, an opinion from the Commission as to whether recital 42 of the 2017 Decision and the concept of an ‘existing producer’ contained therein should be interpreted as requiring that, as at 1 January 2017, ‘the project developers had obtained the necessary state authorisation for constructing the project, and that they had the legal title to the land on which the project would be developed’, in order for them to be regarded as falling within that concept, and thus be able to benefit from State aid compatible with the internal market by virtue of that decision.
24 By an opinion of 17 January 2020 (‘the 2020 opinion’), the Commission responded to that court stating that recital 42 of the 2017 Decision must be interpreted as requiring that, on 1 January 2017, ‘the project developers had obtained the necessary state authorisation for constructing the project, and that they had the legal title to the land on which the project would be developed’. The Commission added that both those conditions were to be fulfilled, together with one of the three alternatives referred to in the first sentence of paragraph 19(44) of the 2014 Guidelines, for an undertaking to be considered as an ‘existing producer’ and thus to benefit from State aid compatible with the internal market under the 2017 Decision.
25 With regard to that opinion, the referring court considers it necessary to ask for further clarification on the concepts of ‘start of works’, ‘construction works on the investment’, any ‘other commitment that makes the investment irreversible’ and ‘necessary state authorisation for constructing the project’ referred to in paragraph 19(44) of the 2014 Guidelines and recital 42 of the 2017 Decision, and on the requirements resulting from those concepts to be taken into account by a national authority in the assessment of the likelihood of completion of an investment project.
26 That court also asks whether the considerations set out in paragraphs 61 and 68 of the judgment of 5 March 2019, Eesti Pagar (C‑349/17, EU:C:2019:172), according to which the aid criteria must be clear and easily applicable by the competent national authorities, do not preclude such a complex economic assessment on a case-by-case basis.
27 In those circumstances, the Tallinna Halduskohus (Administrative Court, Tallinn) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:
‘(1) Must the EU rules on State aid, in particular the first alternative of the definition of “start of works” in paragraph 19(44) of the [2014 Guidelines], namely “start of construction works on the investment”, be interpreted as meaning the start of construction works connected with any investment project or only the start of construction works connected with the installation of the investment project which will produce renewable energy?
(2) Must the EU rules on State aid, in particular the first alternative of the definition of “start of works” in paragraph 19(44) of the [2014 Guidelines], namely “start of construction works on the investment”, be interpreted as meaning that, in a situation in which the competent authority of the Member State has established the start of the construction works in connection with an investment, that authority must, in accordance with the principle of the protection of legitimate expectations, additionally assess the stage of development of the investment project and the likelihood of completion of that project?
(3) If the previous question is answered in the affirmative: can other objective circumstances, such as pending litigation which prevents the continuation of the investment project, be taken into account in the assessment of the stage of development of the investment project?
(4) Is it relevant in the present case that the Court of Justice of the European Union held, in [the judgment of 5 March 2019, Eesti Pagar (C‑349/17, EU:C:2019:172, paragraphs 61 and 68)], that the question as to whether or not an incentive effect exists cannot be regarded as being a criterion that is clear and easily applicable by the national authorities, since its verification would necessitate, on a case-by-case basis, complex economic assessments, with the consequence that such a criterion would not comply with the requirement that the criteria for the application of an exemption must be clear and easily applicable by the national authorities?
(5) If the previous question is answered in the affirmative: must the EU rules on State aid, in particular footnote 66 … [to the 2014 Guidelines], in conjunction with paragraph 19(44) [thereof], be interpreted as meaning that the national authority is not required to make an economic assessment of the investment project, on a case-by-case basis, when examining the criterion of start of works?
(6) If the previous question is answered in the affirmative: must the EU rules on State aid, in particular the last alternative of the definition of “start of works” in paragraph 19(44) of the [2014 Guidelines], namely “other commitment that makes the investment irreversible”, be interpreted as meaning that any other commitment, with the exception of the buying of land and preparatory works (such as obtaining permits), makes the investment irreversible, irrespective of the cost of the commitment entered into?
(7) Must the EU rules on State aid, in particular the concept of “start of works” in paragraph 19(44) of the [2014 Guidelines], be interpreted as meaning that the existence of a right to use the land held by the energy producer and the existence of [the necessary] state authorisation for implementing the investment project are essential conditions for the start of works?
(8) If the previous question is answered in the affirmative: must the concept “[necessary] state authorisation for implementing the investment project” be interpreted in the light of national law, and can it be only the authorisation on the basis of which the construction work relating to the investment project is carried out?’
Consideration of the questions referred for a preliminary ruling
Admissibility of the first to sixth questions
28 The Commission submits that, in view of the answer to be given to the seventh and eighth questions, the first to sixth questions are inadmissible or, at the very least, irrelevant, such that there is no need to answer them.
29 In the first place, the Commission observes that the 2014 Guidelines are binding only on the Commission itself and that they do not create independent legal obligations on the part of the Member States, which are bound only by decisions addressed to them by the Commission pursuant to the guidelines corresponding to the measure at issue. Consequently, paragraph 19(44) and paragraph 126 of, and footnote 66 to, the 2014 Guidelines are not rules of law which the Tallinna Halduskohus (Administrative Court, Tallinn) have to apply directly in the main proceedings.
30 It should be borne in mind that the assessment of the compatibility of aid measures with the internal market, under Article 107(3) TFEU, falls within the exclusive competence of the Commission, subject to review by the Courts of the European Union. In that regard, the Commission enjoys wide discretion, the exercise of which involves complex economic and social assessments. In the exercise of that discretion, the Commission may adopt guidelines in order to establish the criteria on the basis of which it proposes to assess the compatibility with the internal market of aid measures envisaged by the Member States (judgment of 15 December 2022, Veejaam and Espo, C‑470/20, EU:C:2022:981, paragraph 29 and the case-law cited).
31 In adopting such guidelines and announcing, through their publication, that they will apply to the cases to which they relate, the Commission imposes a limit on the exercise of that discretion and cannot, as a general rule, depart from those guidelines, at the risk of being found to be in breach of general principles of law, such as equal treatment or the protection of legitimate expectations (judgment of 15 December 2022, Veejaam and Espo, C‑470/20, EU:C:2022:981, paragraph 30 and the case-law cited).
32 That means that the effect of the adoption of the rules of conduct contained in the 2014 Guidelines is equivalent to the effect of a limitation imposed by the Commission on itself in the exercise of its discretion, so that, if a Member State notifies the Commission of proposed State aid which complies with those rules, the Commission must, as a general rule, authorise that proposed aid (judgment of 15 December 2022, Veejaam and Espo, C‑470/20, EU:C:2022:981, paragraph 31 and the case-law cited).
33 It follows that the 2014 Guidelines are not capable of imposing independent obligations on the Member States (judgment of 15 December 2022, Veejaam and Espo, C‑470/20, EU:C:2022:981, paragraph 32).
34 That said, in accordance with the fourth paragraph of Article 288 TFEU, the 2017 Decision is binding on the Republic of Estonia, to whom it is addressed.
35 As the Advocate General observed in point 30 of his Opinion, the 2017 Decision expressly refers to a number of provisions of the 2014 Guidelines.
36 In particular, recital 42 of the 2017 Decision cites and interprets footnote 66 to the 2014 Guidelines, recital 43 of that decision states that ‘footnote 66 … should … be read and interpreted by the granting authorities against’ ‘the “start of works” definition in paragraph 19(44) [of the 2014 Guidelines]’, and recital 44 of that decision refers to the situation where ‘the granting authority would consider that works on a certain project have been started, within the meaning of paragraph 19(44) [of the 2014 Guidelines], prior to 1 January 2017’.
37 It must therefore be held that, in accordance with the wording of recitals 42 to 44 of the 2017 Decision, that decision requires, in circumstances such as those at issue in the main proceedings, the competent Estonian authorities to apply those provisions of the 2014 Guidelines in the sense conferred on them by those recitals, which is such as to make those provisions binding.
38 Since the referring court is hearing a dispute concerning the legality of a binding assessment issued by Elering and applying, in the light of recitals 42 to 44 of the 2017 Decision, the provisions of the 2014 Guidelines, its questions concerning the interpretation of paragraph 19(44) of, and footnote 66 to, those guidelines must be regarded as admissible.
39 In the second place, the Commission observes that it is apparent from the order for reference that the Estonian Ministry of Defence refused to approve the construction projects for the proposed wind farm and that the Toila Municipal Council therefore refused to issue the construction permits requested by EWP. Those circumstances appear to indicate that not all the necessary state authorisations for constructing the project in question, within the meaning of recital 42 of the 2017 Decision, were available before 31 December 2016. Therefore, it appears that, as at 1 January 2017, that project was not at such state of development that it would very likely be completed and should receive aid under the existing aid scheme within the meaning of recital 42.
40 Such an objection arises not only from an interpretation of the provisions of EU law to which the seventh and eighth questions relate, but also from the application of those provisions to the facts of the dispute in the main proceedings and from the interpretation and application of the relevant provisions of Estonian law to those facts.
41 According to settled case-law, the procedure provided for by Article 267 TFEU is an instrument for cooperation between the Court of Justice and national courts by means of which the Court of Justice provides national courts with the criteria for the interpretation of EU law which they need in order to decide the disputes before them (judgment of 15 September 2011, Unió de Pagesos de Catalunya, C‑197/10, EU:C:2011:590, paragraph 16 and the case-law cited).
42 In such proceedings, which are based on a clear separation of functions between the national courts and the Court of Justice, the national court alone has jurisdiction to find and assess the facts in the case before it and to interpret and apply national law (judgment of 24 July 2023, Lin, C‑107/23 PPU, EU:C:2023:606, paragraph 76 and the case-law cited).
43 In particular, the Court of Justice has repeatedly held that it is not for it, in the context of a request for a preliminary ruling, to rule on the interpretation of national provisions, as such an interpretation falls within the exclusive jurisdiction of the national courts (judgment of 25 November 2020, Sociálna poisťovňa, C‑799/19, EU:C:2020:960, paragraph 45 and the case-law cited).
44 It follows from the foregoing considerations that the first to sixth questions are admissible.
The first and sixth questions relating to the concept of ‘start of work’ within the meaning of paragraph 19(44) of the 2014 Guidelines, read in conjunction with recital 42 of the 2017 Decision
45 By its first and sixth questions, which it is appropriate to examine together, the referring court asks, in essence, whether paragraph 19(44) of the 2014 Guidelines, read in conjunction with recital 42 of the 2017 Decision, must be interpreted as meaning that the concept of ‘start of works’ refers, first, to the start of any construction works on an investment project, whatever those works may be, or only the start of construction works on the installation of an investment project which permits the production of renewable energy and, second, to any other commitment, whatever the nature or cost of that commitment, apart from the purchase of land and preparatory works within the meaning of paragraph 19(44).
46 It should be recalled, at the outset, that according to the Court’s settled case-law, in interpreting a provision of EU law, it is necessary to consider not only its wording but also the context in which it occurs and the objectives pursued by the rules of which it is part (judgment of 8 June 2023, Fastweb and Others (Time frame for billing), C‑468/20, EU:C:2023:447, paragraph 52 and the case-law cited).
47 In the first and third situations referred to in paragraph 19(44) of the 2014 Guidelines, the concept of ‘start of works’ includes the ‘start of construction works on the investment’ or any ‘other commitment that makes the investment irreversible’. That provision further stipulates that the ‘buying of land and preparatory works such as obtaining permits and conducting preliminary feasibility studies shall not be considered as start of works’.
48 While it thus follows from the wording of that provision that construction works necessary for the operation of the investment project, such as, in the case in the main proceedings, the construction of measurement masts and the installation of electrical connections, do not constitute preparatory works within the meaning of that provision and are therefore capable of being covered by the concept of ‘start of works’ within the meaning of paragraph 19(44) of the 2014 Guidelines if the conditions laid down in that provision are met, it is clear that that provision does not identify precisely the nature of the construction works referred to or of the commitments that make the investment irreversible, nor does it establish a threshold above which the works started must be regarded as satisfying those conditions.
49 That said, as the Advocate General observed in points 37 to 39 of his Opinion in the context of recital 42 of the 2017 Decision, the purpose of the concept of ‘start of work’ is to determine which producers could be granted the status of ‘existing producer’ of renewable energy eligible for State aid under an existing aid scheme.
50 It is apparent from recital 42 that it is the ‘producers whose project on 1 January 2017 was in such state of development that it would very likely be completed’ who may be regarded as ‘existing producers’ by the authorities granting the aid.
51 Since recital 42 requires that, on that date, the project concerned was at a ‘state of development’ such that it appeared ‘that it would very likely be completed’, the view cannot be taken that any start of construction works on an investment project, whatever those works may be, satisfies such a criterion.
52 On the contrary, as the Advocate General observed, in essence, in point 43 of his Opinion, it follows that the state of progress of the works in question had to be such that, as at 1 January 2017, the investment concerned was made irreversible and that the developer could be treated in the same way as an existing producer of renewable energy.
53 In the context of recital 42 of the 2017 Decision, the concept of ‘start of works’, within the meaning of paragraph 19(44) of the 2014 Guidelines, must therefore be understood, in all situations, as referring to a state of progress of the works in question which allows the developer to be treated in the same way as an existing producer of renewable energy.
54 Therefore, only a commitment which, on 1 January 2017, brought the investment project to a ‘state of development’ such that it appeared that ‘it would very likely be completed’, and that the project was therefore, in essence, irreversible, may fall, in that context, within the concept of ‘start of works’.
55 As the Advocate General observed, in essence, in points 44 to 46 of his Opinion, that threshold can be regarded as having been reached on that date only if the preparatory works were completed and if the commitment made was sufficiently significant, having regard to its nature and its cost, compared with the total size of the investment project concerned.
56 Although it is for the referring court, which alone has all the relevant information at its disposal, to assess whether, at that date, the state of progress of the construction works for the proposed wind farm supported the conclusion that it appeared very likely that the construction project for that wind farm would be completed, the information available to the Court of Justice tends to indicate that, in the present case, the construction of measurement masts and electrical connections to the transmission system did not constitute such a ‘start of works’ allowing EWP to be treated as an ‘existing producer’ of renewable energy, since only the start of construction works for wind turbines producing renewable energy, or even an irreversible commitment relating to those wind turbines which appear to represent the most significant part of the investment project at issue in the main proceedings, could confer such a status.
57 In the light of the foregoing considerations, the answer to the first and sixth questions is that paragraph 19(44) of the 2014 Guidelines, read in conjunction with recital 42 of the 2017 Decision, must be interpreted as meaning that the concept of ‘start of works’ refers, first, to the start of the construction works on the installation of an investment project allowing the production of renewable energy and, second, to any other commitment which, having regard to its nature and its cost, brought the investment project concerned to a ‘state of development’ on 1 January 2017 such that it appeared that that project would very likely be completed.
The second, fourth and fifth questions relating to the assessment to be conducted by the competent national authority for the purposes of paragraph 19(44) of the 2014 Guidelines, read in conjunction with recitals 42 to 44 of the 2017 Decision
58 By its second, fourth and fifth questions, which it is appropriate to examine together, the referring court asks, in essence, whether paragraph 19(44) of the 2014 Guidelines, read in conjunction with recitals 42 to 44 of the 2017 Decision, must be interpreted as meaning that the competent national authority is required, for the purposes of determining the ‘start of works’ within the meaning of paragraph 19(44), to carry out, on a case-by-case basis, an analysis – and if appropriate an economic, in-depth analysis – of the state of development of the investment project concerned and of the likelihood that it will be completed, or whether it may be limited to a purely factual or formal assessment.
59 In that regard, it should be borne in mind that recitals 42 to 44 of the 2017 Decision state, inter alia, that it is the producers whose project was on 1 January 2017 at a state of development such that it appeared very likely that it would be completed, whom ‘the granting authorities should consider as’ existing producers, that ‘the responsibility for the correct implementation of aid measures remains with the Member States via its relevant authorities’ and that, in the event that ‘the granting authority would consider’ that works on a particular project started, within the meaning of paragraph 19(44) of the 2014 Guidelines, before 1 January 2017, the Commission considers that that assessment relates to that project as such. Those recitals also state that footnote 66 to those guidelines must be ‘read and interpreted by the granting authorities’ taking into account the definition of ‘start of works’ in paragraph 19(44) of the guidelines.
60 Accordingly, it is unequivocally clear from recitals 42 to 44 of the 2017 Decision that, in the context of that decision, the competent authority must carry out a case-by-case review that relates to the question whether the project concerned was, on 1 January 2017, at such a state of development that it appeared very likely that it would be completed. Such an assessment does not lend itself to a purely formal review and may, depending on the case, require an in-depth economic analysis.
61 That finding is not invalidated by the considerations set out in paragraphs 61 and 68 of the judgment of 5 March 2019, Eesti Pagar (C‑349/17, EU:C:2019:172). It is true that, in those paragraphs, the Court, in essence, precluded the competent national authorities from carrying out complex economic assessments on a case-by-case basis and limited the power of those authorities to findings of a factual or formal nature. However, such a limitation was found with respect to the application of Article 8(2) of Commission Regulation (EC) No 800/2008 of 6 August 2008 declaring certain categories of aid compatible with the common market in application of Articles [107 and 108 TFEU] (General block exemption regulation) (OJ 2008 L 214, p. 3), which must be applied uniformly across the Member States by means of clear and easily applicable criteria. In addition, those considerations related to a presumed or actual incentive effect of the aid concerned.
62 By contrast, in the present case, the incentive effect of the Estonian support scheme applicable before the modifications referred to in the 2017 Decision was definitively established by the Commission in that decision, with the result that the assessment to be made by the competent national authority relates exclusively to whether or not the developer had a legitimate expectation justifying protection in obtaining support under that support scheme. Such an examination must necessarily be conducted on a case-by-case basis and cannot be regarded as being limited to a purely factual or formal assessment.
63 In the light of the foregoing considerations, the answer to the second, fourth and fifth questions is that paragraph 19(44) of the 2014 Guidelines, read in conjunction with recitals 42 to 44 of the 2017 Decision, must be interpreted as meaning that the competent national authority is required, for the purposes of determining the ‘start of works’ within the meaning of paragraph 19(44), to carry out, on a case-by-case basis, an analysis of the state of development of the investment project concerned and of the likelihood that it will be completed, which cannot be limited to a purely factual or formal assessment and may, depending on the case, require an in-depth economic analysis.
The third, seventh and eighth questions relating to the concept of ‘state authorisation’ within the meaning of paragraph 19(44) of the 2014 Guidelines, read in conjunction with recital 42 of the 2017 Decision
64 By its third, seventh and eighth questions, which it is appropriate to examine together, the referring court asks, in essence, whether paragraph 19(44) of the 2014 Guidelines, read in conjunction with recital 42 of the 2017 Decision, must be interpreted as meaning that:
– the concept of ‘start of works’ within the meaning of paragraph 19(44) necessarily implies that the developer has the right to use the land on which the investment project concerned is to be constructed and the necessary state authorisation for constructing that project;
– the concept of ‘necessary state authorisation for constructing the project’, referred to in recital 42, must be interpreted having regard to national law and to the effect that it allows the construction works on the investment project concerned to be carried out, and
– ongoing proceedings relating to a refusal to grant such authorisation and preventing the project from continuing must be taken into consideration when assessing the state of development of the project.
65 In that regard, it is apparent from paragraph 19(44) of the 2014 Guidelines that ‘the obtaining of permits’ comes under ‘preparatory works’ and therefore does not constitute ‘start of works’ within the meaning of that provision. In addition, recital 42 of the 2017 Decision unequivocally requires that the project developer has ‘obtained the necessary state authorisation for constructing the project’ and that it has ‘the legal title to the land on which the project would be developed’.
66 It follows, first of all, that the concept of ‘start of works’ set out in paragraph 19(44) necessarily implies, in the context of recital 42, that the developer has the right to use the land on which the investment project concerned will be carried out and the necessary state authorisation for constructing that project.
67 Next, given that those provisions refer to ‘state’ authorisation without specifying, as the Advocate General observed in point 52 of his Opinion, the type of authorisation required, the concept of ‘state authorisation’ must be interpreted having regard to national law.
68 Furthermore, it follows from the findings made in paragraphs 52 to 55 and 62 above that, in the context of the assessment, which it is for the competent national authority to carry out, as to whether or not the developer had a legitimate expectation justifying protection in obtaining aid under an existing aid scheme, that authority is required to ascertain whether, on 1 January 2017, the state of progress of the works in question showed that it was very likely that the investment project concerned would be completed, with the result that that project was, in essence, irreversible and therefore made it possible to treat the developer in the same way as an ‘existing producer’ of renewable energy.
69 It follows that the type of authorisation required under paragraph 19(44) of the 2014 Guidelines, read in conjunction with recital 42 of the 2017 Decision, must also permit the inference that, on that date, it appeared very likely that that project would be completed and, therefore, must allow the developer to be treated in the same way as an ‘existing producer’ of renewable energy.
70 As has been pointed out in paragraph 56 above, in the present case, only the start of construction work on wind turbines producing renewable energy or an irreversible commitment relating to those wind turbines would have enabled EWP to be treated in the same way as such a producer, with the result that the state authorisation required should have allowed that construction work to be carried out.
71 Although it is for the referring court, which alone has all the relevant information available to it, to determine, in the light of those requirements, the type of state authorisation which EWP had to have in the present case, the information available to the Court tends to indicate that, in accordance with Estonian law, urban planning documents do not, in themselves, enable construction works to be carried out in respect of the wind turbines at issue in the main proceedings, but that the execution of those works still requires, by way of final state authorisation, the obtaining of building permits, with the result that it appears that it is those permits which must be regarded as the ‘state authorisation’ required.
72 Finally, as regards the existence of pending proceedings relating to a refusal to grant such authorisation and preventing the continuation of the investment project concerned, it is for the competent national authority, having regard to the findings made most recently in paragraph 68 above, not to speculate on the outcome of such a dispute but to base its decision on the legal and factual situation existing on 1 January 2017.
73 Whatever the outcome of such legal proceedings, an undertaking which did not have on that date the necessary state authorisation for constructing the investment project concerned cannot be regarded as justifying, on that date, a legitimate expectation worthy of protection in obtaining aid under an existing aid scheme.
74 In the light of the foregoing considerations, the answer to the third, seventh and eighth questions is that paragraph 19(44) of the 2014 Guidelines, read in conjunction with recital 42 of the 2017 Decision, must be interpreted as meaning that:
– the concept of ‘start of works’ within the meaning of paragraph 19(44) necessarily implies that the developer has the right to use the land on which the investment project concerned is to be constructed and the necessary state authorisation for constructing that project;
– the concept of ‘necessary state authorisation for constructing the project’, referred to in recital 42, must be interpreted having regard to national law and to the effect that it permits, as final state authorisation, the construction works on the investment project concerned to be carried out;
– the existence of ongoing proceedings on 1 January 2017, relating to a refusal to grant such authorisation and preventing the project from continuing, must not be taken into consideration when assessing the state of development of that project on that date.
Costs
75 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
On those grounds, the Court (First Chamber) hereby rules:
1. Paragraph 19(44) of the Communication from the Commission entitled ‘Guidelines on State aid for environmental protection and energy 2014-2020’, read in conjunction with recital 42 of Commission Decision C(2017) 8456 final of 6 December 2017 concerning amendments to the Estonian support scheme for electricity produced from renewable sources and efficient cogeneration (State aid SA.47354 (2017/NN),
must be interpreted as meaning that the concept of ‘start of works’ refers, first, to the start of the construction works on the installation of an investment project allowing the production of renewable energy and, second, to any other commitment which, having regard to its nature and its cost, brought the investment project concerned to a ‘state of development’ on 1 January 2017 such that it appeared that that project would very likely be completed.
2. Paragraph 19(44) of the Communication from the Commission entitled ‘Guidelines on State aid for environmental protection and energy 2014-2020’, read in conjunction with recitals 42 to 44 of Decision C(2017) 8456,
must be interpreted as meaning that the competent national authority is required, for the purposes of determining the ‘start of works’ within the meaning of paragraph 19(44), to carry out, on a case-by-case basis, an analysis of the state of development of the investment project concerned and of the likelihood that it will be completed, which cannot be limited to a purely factual or formal assessment and may, depending on the case, require an in-depth economic analysis.
3. Paragraph 19(44) of the Communication from the Commission entitled ‘Guidelines on State aid for environmental protection and energy 2014-2020’, read in conjunction with recital 42 of Decision C(2017) 8456,
must be interpreted as meaning that:
– the concept of ‘start of works’ within the meaning of paragraph 19(44) necessarily implies that the developer has the right to use the land on which the investment project concerned is to be constructed and the necessary state authorisation for constructing that project;
– the concept of ‘necessary state authorisation for constructing the project’, referred to in recital 42, must be interpreted having regard to national law and to the effect that it permits, as final state authorisation, the construction works on the investment project concerned to be carried out;
– the existence of ongoing proceedings on 1 January 2017, relating to a refusal to grant such authorisation and preventing the project from continuing, must not be taken into consideration when assessing the state of development of that project on that date.
[Signatures]